The billboard business may be less sexy than a hot, rainbow-colored gaming app, but shares of CBS Outdoor opened 7 percent higher from their I.P.O. price on Friday morning. That was in stark contrast to the disappointing debut of King Digital Entertainment on Wednesday. King, the maker of Candy Crush Saga, opened sharply lower and ended its first trading day down 15.6 percent.
Shares of CBS Outdoor opened around $30, up from its I.P.O. price of $28 in trading on the New York Stock Exchange. The shares closed up 5.4 percent, at $29.51. The new public company raised about $560 million in the offering.
It was a mediocre first-day of trading, but it stood in contrast to the soft demand for shares of King Entertainment earlier in the week.
“What the King I.P.O. did is bring back some sanity in how offerings are priced,” Francis Gaskins, research director at Equities.com, told Reuters. “What investors like are big established companies with high barriers to entry.”
CBS Outdoor, a subsidiary of CBS, is one of the largest advertising companies in the country, operating thousands of billboards, airport signs and digital displays from New York to Los Angeles. But as David Gelles reported on DealBook, the business hasn’t been quite a seamless fit within what is largely a television company:
“As much as we like that business, we are really a content company — that’s where our future is and our growth is,” said Leslie Moonves, chief executive of CBS. “Outdoor doesn’t quite fit with us because it’s sales, but not content. The synergies didn’t really exist.”
CBS will still own about 83 percent of CBS Outdoor, or 81 percent if underwriters exercise their option to buy all of their additional shares, for at least the next six months. When CBS eventually fully divests its stake, CBS Outdoor will convert into a real estate investment trust, a tax-efficient structure that is required to return most profits to shareholders.
